Profit Jumps 89.2% as User Base Shrinks 20.4%
XD Inc. (2400.HK) reported divergent results for the full year ending in December, with net profit surging 89.2% to RMB 1.535 billion while its gamer audience contracted significantly. The company's revenue climbed 15% year-on-year to RMB 5.764 billion, and its adjusted profit rose 83.6% to RMB 1.756 billion. The strong financial performance underscores effective monetization from its top titles, which include "Heartopia," "GoGoMuffin," and "Torchlight: Infinite."
This profitability masks a critical weakness in user engagement. Average monthly active users (MAUs) for its online games plummeted by 20.4% compared to the previous year. Similarly, average monthly paying users dropped by 20.2%. The company attributed this decline to lower player counts in two specific games, "Heartopia" and "SausageMan," indicating a challenge in retaining player interest in its established portfolio.
TapTap Platform Shows Mixed Performance With 14.1% International MAU Drop
The performance of XD's game distribution platform, TapTap, presented a mixed outlook. The domestic Chinese version of the app showed marginal growth, with its average MAUs increasing 2.1% year-on-year to 45 million. This slight gain suggests a stable, albeit maturing, home market.
In contrast, the TapTap international app struggled, experiencing a 14.1% decrease in average MAUs, which fell to 4.3 million. This contraction points to significant headwinds in the company's global expansion efforts and its ability to compete for users outside of China, a key area for future growth.
Capital Allocation in Focus as XD Forgoes Dividend
Despite the substantial increase in net profit, XD Inc. announced it would not issue a final dividend for the fiscal year. This decision to retain cash, even with an earnings per share of RMB 3.19, suggests a cautious stance from management. By withholding a payout to shareholders, the company is likely prioritizing capital for reinvestment.
The move could signal strategic plans to fund the development of new games to replace its aging titles and reverse the trend of declining users. Alternatively, it may reflect management’s uncertainty about whether the current high-profitability, low-user growth model is sustainable in the long term.
